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Account Closed
  • Real Estate Professional
  • Wichita Falls, TX
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Auctions And The Reserve Price.

Account Closed
  • Real Estate Professional
  • Wichita Falls, TX
Posted Dec 9 2014, 18:57

The auctioneer has the seller's reserve price on record, which generally is not the starting  bid.  True, the auctioneer wants the asset to go for as much as possible.

I learned today after several in depth phone conversations with various online auctioneers that all the assets they present are not foreclosures from banks, that investors may turn to them attempting to liquidate parts of their portfolio's.  

No, they can't disclose the reserve price, it's like ebay-- the reserve is met or not met-- and during the auction period the updates are live.  If the reserve is met with a bid, it is posted. 

I personally witnessed a home being auctioned off about 4 miles from me. 

The auctioneer stated that there was an online bid for x amount of dollars. An attendee offered a bid $1000.00 more. No other bids were presented.  The auctioneer and the bidder went behind the house, and when i saw them again, both were on their phones. The contents were still being auctioned off, I like wall art so I stayed.

A month later, I saw the rehab going on and the +1000.00 bidder.  I refreshed the actual auction to him, his + $1000.00 bid and asked what happened.  

He explained that they ended up paying more than their initial bid, but was able to meet  or get close to reserve asking price, which is why he and the auctioneer were on their telephones.

This one was a probate deal.

My questions are: 

Can one go wrong in auctions, when they know the value of an asset, and foreknowledge that it may not be  the bank auctioning it off?;

If a traditional asking price is known and the asset appears on an auction site, do investors make the holy grail of mistakes in assuming that,  the asset has been foreclosed on?;

In the event where the traditional asking price is already known, the asset appears on an online auction site,  does the investor make a mistake drawing an ingrained decision that a bank has actually foreclosed on the asset?;

My final question -- and I saw the answer with my own eyes--  not knowing the reserve asking price of online auctions ( most are advertised locally too)  but armed with the the OWNER'S ACTUAL asking price, prior to any auction attempt, can an investor go wrong with an offer of + $1K, or there about during the duration of the auction? When it approaches what they are actually want to spend, why not make the final offer?

My REI experience of 12/9/14.

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